A pyramid collapse for law schools? Most are losing money this year, law prof says
Most law schools are operating at a deficit this year as they grapple with lower enrollment and try to lure more students with tuition discounts, concludes a law professor who studied the numbers.
Just how many law schools are losing money? Eighty percent to eighty-five percent, according to the estimate by University of Colorado law professor Paul Campos, writing at the blog Lawyers, Guns & Money. Above the Law notes the article.
Campos drew his conclusion after studying the budgets of 31 ABA-approved law schools, 23 of them private and eight of them public, he says in the comments section to his article. He obtained the budgets various ways, including requests to the schools or through open records laws, tax filings and conversations with private individuals.
Since 2010, first-year law-school enrollment is down nearly 25 percent and tuition revenue is down by about 15 percent in real terms, Campos says. But costs aren’t declining to compensate for the lower revenues.
“Very few law schools were running 15 percent operating surpluses three years ago,” Campos says, “which means that the large majority of law schools—I estimate between 80 percent and 85 percent—are incurring significant operating deficits in the present fiscal year.”
Campos writes that the law-school tuition-pricing system “invariably contains the seeds of its own destruction.” Law schools raise tuition each year so they can spend more money in an effort to maintain their place in the law-school rankings.
“This system is a sure-fire recipe for creating fiscally reckless institutions, that charge prices for their outputs that bear no relation to the actual economic value of those outputs, which is of course exactly what has happened,” he writes. “The pyramid collapses, the bubble pops, the extraordinary delusions that fuel the madness of crowds dissipates. And, in American legal education, this is what appears to be happening now.”